Menu

To be Young, Rich, and Philanthropic

A few weeks ago, on the NCRP blog, Ryan Schlegel wrote an insightful post pushing back against some of the breathless celebration that had surrounded the promotion of “hacker philanthropy,” the term that Sean Parker coined in a Wall Street Journal op-ed to describe the giving of his tech mogul peers. Philanthropic “hackers,” according to Parker, are part of a “new global elite,” led by “pioneers in telecommunications, personal computing, Internet services and mobile devices,” with unprecedented financial resources. They are “problem solvers” with “an antiestablishment bias, a belief in radical transparency, a nose for sniffing out vulnerabilities in systems, a desire to ‘hack’ complex problems using elegant technological and social solutions, and an almost religious belief in the power of data to aid in solving those problems.” Many of them are also relatively young, having achieved immense entrepreneurial success before they turned 40. This makes them “an aberration in the history of wealth creation,” since “[y]outh and philanthropy haven’t historically mixed.”

Schlegel takes on Parker’s history on two accounts. First, he argues that “hacker philanthropists”—young entrepreneurs who devote resources to challenge the status quo—are not really that new a phenomenon. Second, he suggests that Parker, in commending hackers for refusing to “assimilate into the stodgy institutions of the past” runs the risk of ignoring that past entirely, and therefore missing an opportunity to mine it for valuable lessons.

Schlegel raises some important points, and any deflation of the overheated rhetoric of tech utopianism is a public service. But I think that Parker—and those who have heralded his op-ed—have a stronger claim for historical novelty than he allows. And what is new about their giving deserves some scrutiny.

Both Carnegie and Rockefeller, Schlegel writes, made a great deal of money when they were young, and began the process of giving it away well before they reached old age. “At 33, Andrew Carnegie had already put in writing the ideals that would become his famous Gospel of Wealth, and at 47, Rockefeller provided the money to found Spelman College, just the first in a string of visionary investments motivated by his radical abolitionist family roots. Today’s generation of tech entrepreneur philanthropists share a passion for iconoclasm and tackling global issues with new ideas that was at the heart of American philanthropy’s founding generation a century ago.”

This is an important corrective to the notion that the Robber Barons responsible for the development of modern philanthropy only turned to giving once their business careers were over (an argument often made to suggest that they approached philanthropy as a form of post-entrepreneurial atonement). Both Rockefeller and Carnegie, for instance, embraced the vocation of philanthropy in their 30s, and saw this as a crucial component of their identity.

But this is not to say that there is nothing distinct or novel about the current moment and about today’s generation of tech entrepreneur philanthropists. They are the heirs of philanthropic innovations that an earlier generation of givers inaugurated, but did not truly develop until later in life. The early philanthropy of Rockefeller and Carnegie, for instance, had much more in common with the giving that characterized the nineteenth century than that which would define the twentieth. It could not truly claim that scale, ambition, or scope—and the commitment to address root causes—that we associate with modern philanthropy.

After all, the ideas that Carnegie put to paper at 33, in the famous note he wrote to himself in which he vowed to “cast aside business forever” and start dedicating himself to “benevelent [sic] purposes,” only barely hinted at his future as a modern philanthropist. His conceptualization of the responsibilities of wealth at that time were much more traditional and even seigniorial, more like those that attended the benevolent, reform-minded British lord. He would dabble in politics, perhaps buy a newspaper to edit. Half a decade later, at 39, he gave his first major gift, a public bath to his hometown of Dunfermline Scotland, and over the next decade, donated libraries to various towns associated with his personal of business interests. But it was not until considerably later in his life—after the publication of the “Gospel of Wealth,” when Carnegie was in his mid-50s—that Carnegie developed a systemic approach to the dispossession of his wealth. This had more to do with Carnegie’s hiring of James Bertram as his personal secretary, who took on the systematization of his library and church organ gifts, as well with his sale of Carnegie Steel to J.P. Morgan in 1901 (when he was in his 60s), and his recognition that if he wished to give away most of his fortune, he would have to commit himself to a much more ambitious program of giving, which included the establishment of philanthropic foundations. So the major philanthropic programs that would define Carnegie’s philanthropic legacy were initiated in his later decades. And he was not even personally engaged in many of these enterprises, losing some interest in philanthropy exactly at the point when his mushrooming fortune was forcing him to ramp his giving up dramatically.

Rockefeller’s giving followed a similar trajectory. For much of his adult life, he could be considered a philanthropist in the traditional sense, meaning that he gave money away to benevolent causes, including, as Schlegel points out, to an array of educational and religious institutions. But the scale of his giving was relatively modest, and generally unsystematic, till he encountered Frederick Gates, the Baptist minister who would serve as his philanthropic advisor, and who convinced him to give $600,000 to establish the University of Chicago in 1889, when Rockefeller was 50. As Rockefeller’s fortune swelled and as he channeled his giving into a number of endowments, his own engagement in the process waned; although he was a trustee, he famously never attended a single board meeting of the Rockefeller Foundation (established when Rockefeller was in his early 70s).

So I do think there is something new about a contemporary mixing of youth and philanthropy, to use Parker’s terms, in which young entrepreneurs take an active engagement in bold, large-scale philanthropic programs. But some caveats are in order. First, it’s still the case that mega-giving is dominated by the over-60 crowd. As a recent report from Wealth-X and Arton Capital recently stated, “UHNW [ultra-high net worth] philanthropists are, on average, over six years older than the typical UHNW individual. This suggests that traditional philanthropy is particularly relevant for UHNW individuals that have passed the wealth accumulation stage, regardless of how their wealth was made. Only 1.1% of all UHNW philanthropists are under 40 years old, down from 2.3% last year, while 12.6% are over 80, remaining at year-on-year.” (The report calculates the average age of an ultra-high net worth philanthropist to be 65).

So we are speaking of a small—if disproportionately high-profile and wealthy—sub-set of large donors: young, tech entrepreneurs. Their giving, on the other hand, constitutes a large chunk of total mega-philanthropy. In 2014, according to the Chronicle of Philanthropy, tech entrepreneurs gave 49% of the $10.2 billion donated by the nation’s top 50 philanthropists. The Chronicle’s list that year, according to the journal, witnessed a “stunning rise in the number of tech entrepreneurs under 40.” There were 3 (less than half the number of ninety-year olds) but they made their giving count—they each gave more than $500 million (only three other donors gave more). The year before, the Chronicle noted, Mark Zuckerberg and Priscilla Chan became the first donors under 30 to head up their list.

Of course, as the case of Zuckerberg and Chan make clear, some of the talk about young tech entrepreneurs devoting themselves to philanthropy is conjectural, based on pledges. We don’t know exactly yet when the philanthropists will fully put their money where their mouths—or Facebook posts—are. And with the rise of donor advised funds—Zuckerberg and Chan’s big gift in 2013 was to a DAF at the Silicon Valley Community Foundation—we should differentiate between the initial philanthropic gift and the time that they money actually reaches nonprofits, which could be decades from now, when the tech moguls are graying.

But I do think that this represents a new development, and one that is no doubt occurring in the lower, seven-figure ranks of tech giving—which doesn’t necessarily register in the major giving lists. Already, we have anecdotal evidence that confirms not only that tech and finance entrepreneurs are making enormous personal fortunes even earlier than they used to, but that they are beginning their philanthropic careers earlier as well. For instance, Nick Tedesco, who heads J.P. Morgan Private Bank’s Philanthropy Centre’s west coast office, suggested as much recently to Inside Philanthropy. Young tech moguls are “thinking about philanthropy as a complement to their existing careers,” as opposed to as a capstone to them, he explained. And such a commitment is becoming an important and competitive mark of status, like driving a Tesla. “These tech entrepreneurs are challenging each other to engage in philanthropy,” Tedesco notes.

His comments suggest to me two related elements that highlight what is most significantly novel about this development. First, we are seeing explicit evangelizing among certain high-profile tech and finance givers to their peers to begin their giving sooner. There is now social pressure to give young. In an interview with the Chronicle of Philanthropy, for example, Priscilla Chan agreed that she hoped that the pledge that she and Mark Zuckerberg made would serve as a spur for others to get engaged in philanthropy. “We hope that others will also commit to giving generously and starting young.”

Most striking in this campaign is that often, as in Parker’s manifesto, youth itself is presented as a philanthropic resources, a measure of distance from the traditional establishment. Rockefeller or Carnegie, and many of their philanthropic heirs, would never have made such an argument. Their status came despite their youth—and Rockefeller especially cultivated an image of preternatural maturity (having an absent father probably had much to do with this). Carnegie, for his part, as his biographer David Nasaw has pointed out, was from his days as a young telegraph operator onward, a company man, someone who relished navigating bureaucracies, a canny insider.

So can youth serve the sector? I’m not sure we should be so quick to dismiss this possibility. From the earliest days of modern philanthropy, its critics have noted that those controlling the resources tended to be éminence grise, with the particular conservative orientation that long seasoning in the boardroom bestows. They didn’t particularly feel that trustees’ deep experience was always necessarily a boon. It could make them timid and parochial as often as wise and far-seeing. And though there is of course no necessary correlation between age and philanthropic orientation, I do think it’s likely that a crop of younger philanthropic leaders would bring different perspectives and priorities to the sector, and that this is a good thing, at the very least for the sake of viewpoint diversity.

But I do have two concerns with “hacker philanthropy’s” celebration of youth. The first is related to the notion that starting philanthropy early allows one a longer period to experiment, and thus to make mistakes and learn from them. I don’t think it’s fair to suggest that young tech entrepreneurs make more wrong-turns than more experienced hands in the field, but we are witnessing a particular valorization of the philanthropic mistake as a necessary corollary of the “big bet.” As Parker announced in his op-ed, in his approach, “being wrong is as valuable as being right.” Such an attitude, if not restrained by a sense of empathy, can lead to a cavalier attitude toward the collateral damage done by philanthropic gambits in the everyday life of the ordinary people they impact. “Move fast and break things” used to be Facebook’s motto, but it’s not a good policy as a grant-maker; and while Zuckerberg has explained his campaign to transform Newark public education as a learning opportunity that would allow him to grow as a philanthropist, he would have learned more if he had moved slower and broken less.

Second, as Schlegel noted in his NCRP post, a celebration of youth can lead to a preoccupation with the discontinuities in the philanthropic sector, a sense of alienation from past experiences in the sector. While I wouldn’t blame young tech moguls from rolling their eyes at tales of some previous foundation golden age—that time the Ford Foundation program officer walked to his office, both ways uphill, in the snow—it would be a shame if a focus on the future led to a downgrading of the importance of engaging with the successes and failures that have marked the sector’s past. Cultivating a keen sense of history is the best way to ensure that philanthropy and youth do in fact mix—and mix well.

-Benjamin Soskis

Benjamin Soskis is co-editor of HistPhil, a frequent contributor to the Chronicle of Philanthropy, and a Fellow at the Center for Nonprofit Management, Philanthropy and Policy at George Mason University.

2 thoughts on “To be Young, Rich, and Philanthropic”

My primary concern regards the scale of the grants the younger tech philanthropists have made in a seemingly broad brush manner. Starting their philanthropy with so much capital and grants of enormous size may deny them a chance to learn from the bottom up. There is a great deal a grant maker can learn by making smaller, yet strategically meaningful grants after significant analysis of the problem. Perhaps these grants are the result of persuasive fundraising.

I suspect that young, hyper-wealthy young men have always seen the past as prologue, and themselves as the avatars of a new era. They used to be princes and then robber barons. The problem is if we give them too much attention or credence.